When I was going to law school, there was this relatively new group dedicated to a legal counter-revolution.  One of their desires was to roll back the growth of the administrative state.  According to this group, the Supreme Court of the 1900-1935 period had it right, and that many aspects of administrative law were unconstitutional.  They sought to overturn most of the Supreme Court decisions regarding administrative law from the 1935-86 period.  That group was the Federalist Society, and the legal extremists who were outliers in 1990 are, while still extremists and outliers, now the majority of the U.S. Supreme Court.  The end of term saw three major decisions which show that these supporters of laissez faire capitalism which place investors over workers, consumers and the general public are very close to near total success.

To understand these decisions, a brief background on administrative law would be helpful.  The basic concept of the administrative state is that the real world is complex and that the legislative process is too cumbersome (and legislators are too lacking in technical expertise) to quickly adjust to changes.  To meet this need, Congress established administrative agencies which would have the expertise to evaluate changes and could quickly enact regulations to deal with those changes.  In the early days, the Supreme Court resisted this process under the “non-delegation doctrine” which held that Congress could not delegate the power to make law.  After the New Deal, the Supreme Court found that Congress could delegate the power to make rules as long as the statutes granting that regulatory power was sufficiently clear on the desired goals of the regulations and the standards that the agencies were to follow in those regulations.  In recent years, there has been an attempt to partially resurrect the non-delegation doctrine in the form of the “major questions doctrine” which seeks to limit the application of the existing laws to new issues even though the very reason for administrative agencies is to increase the flexibility to respond to new issues in a field.    Shortly after World War II, Congress adopted the Administrative Procedure Act — a complex set of laws which detail the process for adopting regulations (longer than the early advocates of administrative law would have liked), challenging those regulations, and imposing administrative penalties for violations of those regulations.  This year’s cases involved three aspects of that administrative process.

The most significant of these cases involve whether a regulation is authorized by statute.  Back in the 1980, when many judges were appointed by Democrats but Republicans were in the White House, a Republican-controlled Supreme Court decided in a case involving Chevron and environmental groups that courts should defer to the interpretation given by administrative agencies of ambiguous statutes in determining the validity of regulations.  There were always question about how ambiguous a statute needed to be for Chevron deference to apply and whether recently adopted views (of the political appointees over the agency) should be given the same deference as long-standing interpretations, but the basic concept was considered good law.  But to a group trying to neuter the administrative state, allowing agencies broad discretion to determine what regulations are allowed was something that could not be tolerated.  For most of the past decade or so, this crusade had to be satisfied with a Supreme Court that abused textualism to find that statutes were not sufficiently ambiguous and that the administrative agencies’ interpretations of their governing statutes were, therefore, not reasonable.  To be crystal clear, at a general level, this push back on Chevron deference is not completely insane.  An administrative agency should not be allowed to ignore the governing statute, and it is primarily the obligation of the judicial branch to determine the meaning of a statute.  But, in many cases, the rules for construing statutes suggest multiple alternative answers.  While one answer may be the “best” answer under the rules, it is not crystal clear that the “best” answer is the answer that Congress intended.  When there is no conclusive answer, should the agency have some flexibility or should a split Supreme Court (or appellate court) be able to insist on one answer.

After years of fighting off this “only one correct answer” push by the Supreme Court, Chevron deference finally was killed by Chief Justice Roberts in Loper Bright Enterprises vs. Raimondo.  In the eyes of the Chief Justice, traditionally, executive branch interpretations (especially those immediately after the adoption of a statute) were something that courts considered as part of analyzing the meaning of the statute to those who adopted the statute, but elevating that consideration of traditions to a command of deference was wrong.  The majority opinion pretends that textualism gives definite answers and does not allow judges to twist statutes to meet their policy preferences.  This fictional view of the law is repeated in concurring opinions by Justice Thomas and Justice Gorsuch with Justice Thomas going so far as to argue that deferring to administrative agencies is not just contrary to the Administrative Procedure Act but would also be an unconstitutional surrender of judicial power to the executive branch.  While Chief Justice Roberts opinion suggests that individual cases arising under Chevron are still good law and will not require overruling prior decisions on the proper scope of statutes, it is unclear that all of the justices in the majority will agree.  The majority opinion does not address what “default” rule will replace Chevron deference for those cases in which statutory construction leaves two equally good answers.    The dissent, written by Justice Kagan, takes the position that Chevron deference, properly interpreted, was just the default rule and that default rule is consistent with the general intent of Congress in delegating the regulatory power to administrative agencies — that the administrative agency would get to fill in the gaps in the statutory scheme were Congress could not be sufficiently clear.  In other words, rather than Chevron allowing administrative agencies to usurp judicial powers, it is Loper Bright which is the usurpation by the judiciary of the powers that the APA gives to administrative agencies.

The error in Loper Bright was compounded on the last day of the term in Corner Post, Inc., vs. Board of Governors of the Federal Reserve System. The Administrative Procedure Act sets up a process by which administrative agencies propose, accept and review comments on, and then adopt regulations.   The Act also sets forth procedures by which injured parties can challenge those regulations.  The traditional understanding is that the time for challenging a regulation begins when the regulations are adopted.  While some people who oppose the regulation may not be personally harmed (and therefore lack standing) to sue at the time that the regulation is imposed, there are certainly enough people subject to the regulation who can bring the challenge within the time permitted by the statute.  In an opinion written by Justice Barrett, the Supreme Court held that the traditional understanding was wrong.

The specific issue in Corner Post is the regulation governing the fees that debit and credit card companies charge the merchants who accept credit and debit cards.  The current regulation dates back to 2011.  Using that date, the deadline to challenge the regulation would have been 2017.  And in 2011, there were thousands of merchants (and hundreds of banks) impacted by the regulation who could have challenged that regulation.  (Some of them did so but the courts rejected their claims.)  Corner Post, however, did not exist in 2011.  It started operation in 2017.  And it finally got tired of paying what it considered to be excessive fees in 2021 and challenged the regulation in court. Under the traditional view, Corner Post’s suit was too late to challenge a regulation which had been on the books for ten years.  But, according to Justice Barrett and her colleagues, even though the regulation was on the books since 2011, Corner Post only became harmed by the regulation in 2017, and the time for Corner Post to challenge the regulation started in 2017 even though it had expired for other parties that had been injured back in 2011.

The clear import of this decision is that a regulation can be challenged at any time as there is always some new party that has just been injured.  You don’t like the rule protecting the spotted owl.  While you might not have owned land impacted by that regulation back when it was adopted, but you can purchase that land now and your time for challenging will start today.  While one would think that stare decisis would be fatal to duplicative challenges to a regulation, recent history shows that this Court only gives lip service to stare decisis and that it is highly likely that there will be some decision after the initial court approval of a regulation that future challengers can use to suggest that courts should reconsider the initial approval.

Justice Kavanaugh writes a lengthy concurring opinion on a tangential issue in the case — whether the Adminstrative Procedure Act authorizes a court to vacate a regulation.  The dissent, written by Justice Jackson, points out the implication noted above — that the read of the statute of limitations by the majority effectively means that there is no statute of limitations on a facial challenge to the validity of a regulation.

Compared to these two bombshells that effectively amputate major limbs of current administrative law, the third opinion is merely the legal equivalent of a broken bone,  Many administrative agencies have the authority to impose some penalty through an administrative hearing process subject to judicial review of that agency decision.  The Secuities and Exchange Commission is one of those agencies.  Its rules bar certain types of fraud in the offering and sale of securities and similar financial instruments.  If a person violates the rules, the SEC has the authority — instead of bringing criminal charges or filing a civil fraud claim — to impose a civil penalty after a hearing in front of an administrative law judge.  In SEC v. Jarkesy, the SEC had sought (and obtained) administrative penalties against the defendant for securities fraud.  The defendant alleged, however, that those penalties were invalid because he had a right under the Seventh Amendment to a jury trial.  In an opinion by Chief Justice Robert, the majority of the Supreme Court agreed with the defendant.

Understanding this case requires a brief detour into legal history.  The Seventh Amendment creates a right to a jury trial in “suits at common law.”    At the time of the framing, what today we consider to be the law had two categories — “suits at law” and “equity.”  Grossly oversimplified, suits at equity sought court orders (injunctions, the dissolution of businesses or marriages, writs) and suits at law sought money damages for injuries (breach of contracts, personal injuries, malpractice).  But since the adoption of the Constitution, new statutory causes of action have been created.  And courts have generally allowed Congress (or state legislatures for state statutes in states with equivalent provisions) to set the rules for such new causes of action.  The majority opinion finds that, even though the administrative penalties imposed by the SEC are a “new” cause of action, the penalties are based on claims of fraud which is a traditional common law claim.  As such, the Seventh Amendment creates a right to a jury trial and Congress lacked the power to create this subcategory of fraud for which there was no right to a jury trial.  In theory, this opinion impacts only certain administrative penalties — those for which the regulation covers issues for which there is a comparable common law cause of action.  Justice Gorsuch, joined by Justice Thomas, writes a concurring opinion that notes several other constitutional provisions which in their view call into question the administrative hearing process.  These arguments would apply to most, if not all, administrative penalties.  The dissent, written by Justice Sotomayor, as with the two other cases (which were issued after Jarkesy) points out that the majority is upending well-established administrative law rules.

It is crystal clear that the current Supreme Court majority is hostile to the administrative state and seeks to expand judicial power to protect businesses from statutes designed to protect the environment, small investors, customers, and workers.  It is also clear that there are multiple camps within the conservative wing of the court.  At the far end, you have Thomas and Alito.  For those two justices, you simply need to know the position of the Republican Party to know what position they will take on a case even if taking that position requires ignoring what they have written in other cases.  Justice Gorsuch seems to be almost as bad, although there are a handful of areas in which his personal experiences lead him to a different position.  The next three justices are somewhat to the right of traditional conservativism although not as far right as the first three.  Justice Kavanaugh seems to be the most conservative of the three, at least, in his willingness to stretch the law to benefit businesses.  It is hard to tell whom is the “center” justice as both Justice Barrett and Chief Justice Roberts seem to be on the same page on most cases.  And then you have the three liberal justices.  Given the cases that the Supreme Court is currently taking, it is hard to even describe them as liberal (although, in the right case, they will take the middle position).  Most of the current cases, however, are ones in which the positions taken by Justice Kagan, Justice Sotomayor, and Justice Jackson are the same that a traditional conservative who valued precedent and stability would take.

As we close the term (and I have one last post to write), I am concerned for the future of the Supreme Court.  The rule of law depends on stability and the view that the Supreme Court is fair and follows the law wherever it leads.  In the traditional view of the law, the job of judges is to interpret the law according to established rules and procedures.  In the twentieth century, several schools of thought arose challenging that traditional view — initially judicial realism and now critical legal studies.  These alternative schools opine that judges are simply policy makers implement policy goals and that we should examine what policy goals these unelected individuals are pursuing.  These critiques implicitly call into question the authority of the judiciary which depends on people believing that justices are merely following the law.  Cases like these three make the point that the legal realists might just be correct.  And that reality is shown by the declining standing of the Supreme Court in opinion polls.  And that trend, along with other trends in actual elections, is worrisome for the future of this country.