The Supreme Court Blasts the Administrative State with Both Barrels

In elementary school, we learn that there are three branches of government: the legislative branch that writes the law; the executive branch that enforces the law; and the judicial branch that interprets the law. A de facto fourth branch of government, however, dominates our lives: the administrative state, which is full of unelected bureaucrats who do not serve at the pleasure of the President. For nearly a century, they have imposed their own policies on Americans through regulations, not laws, and the Supreme Court generally ordered the lower courts to stand down and defer to the agencies’ power grabs. Thankfully, at the end of its term, the Supreme Court dramatically weakened the administrative state in two crucial cases.

The first blow came from Securities and Exchange Commission v. Jarkesy. The Dodd-Frank Act of 2010, among other things, granted the SEC the power to seek judgments against alleged violators through in-house proceedings instead of through federal courts, with federal judges and juries. Administrative law judges, who are not presidential appointees and subject only to for-cause removal, oversee the cases and determine culpability. The SEC brought securities fraud charges against George Jarkesy and sought $300,000 in penalties. Jarkesy objected, claiming that the Seventh Amendment of the Constitution entitles him to a jury trial in federal court.

The justices agreed with Jarkesy, holding that one has a right to a jury trial when the civil allegations are akin to common law actions that would have warranted a jury trial at the time of the Seventh Amendment’s adoption. The Seventh Amendment refers to “suits at common law,” and fraud certainly qualifies. 

The leftist justices—Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson—dissented. They argued that the Court’s ruling would stop administrative agencies from enforcing regulations because jury trials are too onerous. But, as Justice Neil Gorsuch emphasized in a concurring opinion, the SEC has ample means to hold Jarkesy accountable for his alleged fraud. If Jarkesy is a fraudster, the SEC can prove it to a jury, as the Constitution requires.

While the decision in Jarkesy was significant by itself, the Court’s decision the next day in Loper Bright Enterprises v. Raimondo was seismic. The Loper Bright plaintiffs were herring fishermen from Cape May, New Jersey. The National Marine Fisheries Service (NMFS) requires the presence of federal monitors on fishing boats to ensure compliance with applicable regulations and collect biological data. The NMFS ran out of funds to pay these monitors, so these bureaucrats dumped the cost on average fishermen to the tune of $700 a day. This government-imposed cost was an extraordinary burden to fishermen struggling to stay afloat in the rough economy. Instead of paying for crew members and supplies, they had to pay the government. No statute authorized the NMFS to levy these costs, so how could the agency do so?

The answer goes back to a Supreme Court case decided four decades ago in Chevron v. Natural Resources Defense Council. The decision declared that courts must defer to an agency’s interpretation of a statute if the statutory language is ambiguous, and the agency’s interpretation is reasonable. This judicial submission to the whims of agencies, known as Chevron deference, granted bureaucrats massive power to regulate Americans’ lives in extraordinary ways. Proponents of Chevron deference assert that it is necessary because agencies have expertise that courts do not. But you don’t need to be an expert on fisheries to know that a statute doesn’t allow the NMFS to snatch $700 a day from hardworking fishermen.

The Supreme Court used Loper Bright to overrule Chevron deference, which Chief Justice John Roberts said “becomes a license authorizing an agency to change positions as much as it likes.” In other words, experts’ views do not need to change; agencies can change their positions and significantly alter people’s lives without constraint. This is not the way to run a republic. The people loan power to elected officials, not unelected bureaucrats whose removal is difficult to obtain.

Bureaucrats who oversee regulations have accrued far too much power since the New Deal, and Chevron deference grossly expanded that undeserved power. The justices issued a decision that favors the republic and the American public, because agency decisions are now subject to the same scrutiny as decisions of Congress. Judicial review applies equally, as it should.

With his appointments of Justice Gorsuch, Kavanaugh, and Barrett, President Trump transformed the left-of-center Supreme Court to the first constitutionalist Supreme Court in nearly a century. The Court is now a champion of government by elected officials and not career bureaucrats. If this trajectory continues, perhaps we can get back to the days of the divided powers of the three branches about which we learned in elementary school. The destruction of the administrative state in the face of its ardent defense from leftists is a victory to savor.

Mike Davis is the Founder and President of Article III Project.