Federal agency powers in the crosshairs at the US Supreme Court

[July 05, 2023]  By Andrew Chung and John Kruzel

WASHINGTON (Reuters) - Even as it has ushered in sweeping changes to American law and society - on abortion, gun rights and affirmative action - the U.S. Supreme Court has kept tabs on another issue of keen interest to its conservative majority: keeping federal regulatory power in check.

The issue will figure prominently during the court's next term, which begins in October, as the justices already have agreed to decide several cases that could curtail the authority of U.S. agencies to issue regulations and enforce laws in areas ranging from finance to fisheries.

The cases involve what has come to be known as the "administrative state," the agency bureaucracy that interprets laws, crafts federal rules and implements executive action. The court's conservatives, with a 6-3 majority, in recent years have reined in what they viewed as governmental overreach by the Environmental Protection Agency (EPA) and other agencies.

"Next term is going to be a huge one at the court for cases involving the administrative state," said Brianne Gorod, chief counsel at the Constitutional Accountability Center liberal legal group. "These cases all represent challenges that are part of a long-running, multifaceted conservative attack on the administrative state, and nothing less than the ability of the federal government to function effectively is at stake."

The court, in a summer recess after ending its last term on Friday, has agreed to hear in its coming term cases challenging the constitutionality of the funding structure for the Consumer Financial Protection Bureau (CFPB) and the in-house enforcement regime at the Securities and Exchange Commission (SEC). It also could overturn a decades-old precedent that helps federal agencies defend their regulatory actions in court.

Legal experts see potential trouble ahead for the agencies.

"It's harder for the court to rule that the agency's composition or funding mechanism is unconstitutional without declaring a lot of what the agency has done to be illegal," said Jonathan Adler, a professor at Case Western Reserve University School of Law in Cleveland.

The court's conservatives have proven willing to make vast changes to the law. Last year, they ended the recognition of a woman's constitutional right to abortion and expanded gun rights. Last week, they rejected affirmative action policies used by many universities to boost Black and Hispanic student enrollment and allowed certain businesses to refuse services for same-sex weddings.

They also last week blocked President Joe Biden's student debt relief plan and in May embraced a stringent new test for declaring wetlands protected under a landmark anti-pollution law - rulings that limited the role of the U.S. government's executive branch and curtailed its regulatory power.

A view shows the pediment of the U.S. Supreme Court building as rulings are expected to be released today in Washington, D.C., U.S. June 25, 2021. REUTERS/Ken Cedeno

PAYDAY LOANS

In the upcoming CFPB case, the justices will hear the agency's appeal of a lower court's ruling that its funding mechanism violated a constitutional provision giving Congress the power of the purse. The case involves a lawsuit by trade groups representing the payday loan industry against the agency that enforces consumer financial laws.

In the latest legal attack on the SEC, the financial markets regulator, the justices will hear a Biden administration appeal of a lower court's decision striking down the agency's enforcement proceedings as a violation of the constitutional right to a jury trial. The case involves a hedge fund manager who the SEC found committed securities fraud.

The court will also weigh a challenge by New Jersey-based fishing companies to a federal regulation requiring commercial fishermen to help fund a program monitoring herring catches off New England's coast. The companies asked the court to overturn its own precedent that calls for judges to defer to federal agency interpretation of U.S. laws, a doctrine called "Chevron deference."

For the conservative justices, cases such as these often raise a central concern: the constitutional principle of separation of powers among the U.S. government's executive, legislative and judicial branches.

"This is a court that is very interested and comfortable with separation-of-powers cases and is very interested in opining on it," said attorney Sarah Harris, an administrative law expert who has argued cases before the justices.

The court's embrace of the "major questions" doctrine has provided a seismic shift in its approach toward agency power. This judicial approach gives judges broad discretion to invalidate executive branch actions of "vast economic and political significance" unless Congress clearly authorized them.

The court's conservatives this year invoked the doctrine to invalidate Biden's student debt relief and last year to curb EPA authority to reduce carbon emissions from power plants. In a dissent in the student loans ruling, liberal Justice Elena Kagan called the doctrine "made-up."

University of Texas law professor Thomas McGarity, a critic of the doctrine, said the court's approach is diminishing "the agencies to which Congress has assigned the responsibility for protecting people, for protecting the environment and for protecting consumers."

(Reporting by Andrew Chung in New York and John Kruzel in Washington; Editing by Will Dunham)

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