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U.S. Federal Agencies Under Fire?

Last week, the U.S. Supreme Court rejected the long-standing Chevron test in Loper Bright Enterprises v. Raimondo. The Chevron test gave deference to a government agency’s expertise when a law is ambiguous regarding the scope of delegation and rulemaking authority. While the decision certainly received significant attention, it is only one in a series of decisions that impact federal agency power. 

Just 24 hours earlier, the Supreme Court in SEC v. Jarkesy struck down the Securities and Exchange Commission’s (SEC's) in-house system for deciding civil fraud penalties. In Jarkesy, the Court held that defendants are entitled to jury trials when the SEC seeks civil penalties for securities fraud, as such fraud is similar to the type of common law fraud traditionally heard by juries and civil penalties are “designed to punish and deter, not to compensate” victims of the alleged fraud. While the Court’s opinion is limited to civil penalties for fraud, this decision is likely to result in challenges to other proceedings, including administrative cases brought by other agencies such as the U.S. Department of Labor and Environmental Protective Agency.  

The Supreme Court dealt yet another hit to federal agencies earlier this week when, in Corner Post v. Board of Governors of the Federal Reserve, the Court extended the time frame for challenges to regulations. In Corner Post, the Court ruled that a six-year statute of limitations under the Administrative Procedure Act for filing lawsuits begins when a regulation first affects a company, not when the regulation is first issued. This decision may create uncertainty about existing regulations by allowing new legal challenges.  

And there may be more to come. On June 14, 2024, Consumers' Research and By Two, L.P., two educational groups that brought a Freedom of Information Act lawsuit against the U.S. Consumer Products Safety Commission (CPSC), filed a petition for a writ of certiorari with the Supreme Court asking the Court to consider whether the for-cause restriction on the President's authority to remove Commissioners of the CPSC, based on precedence from 1935, violates the separation of powers. The petitioners argue, among other things, that because the CPSC wields substantial executive power, its Commissioners must be removable at will by the President, otherwise, we are essentially left with an unaccountable de facto fourth branch of government without accountability to the President or voters. If the Supreme Court does decide to take the case and ultimately sides with the petitioners, the impact could be monumental—potentially calling into question the constitutionality of numerous federal agencies. 



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