By Rachel Frazin - 06/29/24

The Supreme Court has broadly expanded the power of judges at the expense of federal agencies with a pair of decisions this week, and it could be poised to do so again next week.

Altogether, its actions to transfer authority from agencies to the judiciary could curtail a wide range of financial, environmental, workplace and consumer protections.

“It’s just part of a continuing trend with the federal judiciary and the Supreme Court in particular, exercising more and more power … at the expense, potentially, of the other branches,” said Don Goodson, deputy director of the Institute for Policy Integrity at New York University School of Law.

On Friday, the court struck down a legal doctrine known as the Chevron deference that instructed judges to defer to agencies when the law is ambiguous, in a case known as Loper Bright v. Raimondo.

That decision came one day after it ruled that the Securities and Exchange Commission’s (SEC) use of internal administrative courts to try civil fraud cases was unconstitutional — a move that could reverberate to other agencies that also use administrative courts.

In a scathing dissent on the Chevron case, Justice Elena Kagan wrote “it is impossible to pretend that today’s decision is a one-off” in how it treats agencies, noting that the SEC case similarly kneecapped them.

“This very Term presents yet another example of the Court’s resolve to roll back agency authority,” she added.

Next week the court is expected to issue a decision in a third case that could weaken regulatory statutes of limitation and give opponents of a federal action more time to sue.

“You do see a court that’s growing increasingly skeptical of executive power and administrative power” over the last decade, said Jesse Panuccio, who was the Justice Department’s acting associate attorney general during the Trump administration.

“The executive branch has grown vastly in its powers and in the scope of its regulation,” he added. “I think the court is saying, if that’s where we’re going to be, we need to rein in some of these presumptions in favor of agencies.”

But critics of the court’s moves say that they could weaken the agencies to the detriment of the country.

James Goodwin, policy director at the Center for Progressive Reform, said that the opinions issued this past week are “all pointed in the same anti-regulatory direction.”

He said the SEC case will “have a chilling effect on agency enforcement actions,” while the Loper Bright case will have a “similar chilling effect on agencies, but with respect to policy making.”

The latter case is expected to allow judges to more easily strike down federal agency rules. That increase in judicial power is technically politically neutral, though liberal critics say the federal judiciary’s conservative makeup could in practice enable right-wing principles to prevail in many cases.

Goodson said that even prior to the decision, some agencies may have already been avoiding actions that would rely on Chevron out of fear that the precedent would be overturned.

“Many people have been treating Chevron as overruled for several years now because of the extreme skepticism that has been coming from members of the court,” he said.

The SEC case will apply “anytime federal agencies seek to pursue civil penalties for certain kinds of violations,” like fraud, requiring such cases to go to the federal judiciary, said Cary Coglianese, a law professor at the University of Pennsylvania.

But he noted that agencies like the Consumer Financial Protection Bureau could also see their cases shifted to federal court — and that the ruling could reach nonfinancial agencies, too, in cases like fraudulent filing of environmental reports with the government.

The cases echo a prior decision that also curbed federal agencies’ power. In that 2022 ruling, the Supreme Court not only limited how the Environmental Protection Agency (EPA) can regulate climate change, it also codified a legal theory known as the “major questions doctrine,” which holds that regulations of substantial national significance need to have clear authorization from Congress.

Ann Carlson, an environmental law professor at the University of California, Los Angeles, said that decision will have an even greater impact than the more recent ones.

When the major questions doctrine is applied, “the agency doesn’t even have the power to regulate, let alone to regulate in a particular way,” said Carlson, who also recently served in the National Highway Traffic Safety Administration under President Biden.

Carlson said that Friday’s decision is “one more weapon … in an arsenal being used to attack the administrative state,” but that she expects the “major questions doctrine” to be much more impactful.

Goodwin, with the Center for Progressive Reform, similarly said that he expects major questions to come into play for the biggest cases, while the Loper Bright ruling may have an impact in cases involving more “intermediate” rules like endangered species protections.

Panuccio, the former Justice Department official who is now a partner at law firm Boies Schiller Flexner, said that in the coming years, the court has the opportunity to go even further in reining in the other branches by looking to restrict what authorities Congress is allowed to delegate to the agencies.

“That’s always a challenge that pops up here and there, which is … is the court willing to revisit what’s called the non-delegation doctrine and put some limits on what Congress allows agencies to do?” he said.

“So long as there are regulated parties and parties on the losing end of a government decision, that’s always something litigants are going to try …. to try to get that question before the court again,” he added.