After the U.S. Supreme Court limited the power of federal agencies in two cases last week, progressive critics predictably complained that the decisions favored “big corporations,” “corporate interests,” and “the rich and powerful.”
The commentary overlooks the reality that people with little wealth or power often have to contend with imperious bureaucrats who create their own authority and play by their own rules.
In an even more significant case, the Court rejected the Chevron principle, which requires judges to defer to a federal agency’s “permissible” interpretation of an “ambiguous” statute.
The majority said the rule, which the Supreme Court enacted in 1984, is unenforceable (it creates a “perpetual fog of uncertainty” about what the law permits and requires) and fundamentally flawed (it allows the executive branch to usurp judicial functions).
While People for the American Way saw it as a victory for “corporate interests desperate to usurp the power of federal agencies to protect our health and welfare,” the dispute at the heart of the lawsuit complicates the picture.
Two family-run fishing companies challenged the onerous regulatory fees, saying they had never been approved by Parliament.
In his concurring opinion, Justice Neil Gorsuch pointed to other examples of vulnerable petitioners who are harmed by government agencies’ ability to freely rewrite the laws under which they operate.
He cited the examples of military veterans seeking disability benefits and immigrants fighting to stay in the country.
Because of arbitrary rules created by the VA for its own convenience, Thomas Buffington lost three years of government disability benefits.
Alfonzo de Niz Robles faced deportation and separation from his American wife and children after the Board of Immigration Review overturned judicial precedent that he and many other immigrants had relied on for relief.
“Sophisticated organizations and their lawyers may be able to keep up with changes in rules that affect their rights and responsibilities,” Gorsuch noted. They can lobby for “reasonable” agency interpretations and “even take control of the agencies that issue the rules.”
In contrast, Gorsuch added, “ordinary people can’t do any of these things.”
They are the ones who “suffer the worst regulatory upheaval” when laws change at the whim of bureaucrats.
In another case, the Supreme Court ruled that the Seventh Amendment requires that those accused of securities fraud be given a jury trial.
The majority said the SEC violated that right by minimizing ex-post independent review and imposing civil penalties through its internal procedures.
The plaintiffs in that case were hedge fund managers accused of lying to clients and inflating fees.
The progressive media outlet Common Dreams denounced the “triumph of the rich and powerful.”
But in SEC fraud proceedings, the regulators almost always prevailed. Also Those affected who have only moderate incomes face even more questionable allegations.
Consider accountant Michelle Cochran, a single mother of two who was fined $22,500 and banned from practicing law for five years after defending herself in an internal lawsuit against the SEC.
When authorities investigated her former employer, they concluded that she “did not complete audit checklists and left some sections blank,” but there was “no evidence” that the incomplete documentation caused “financial harm to clients or investors.”
Gorsuch noted that the SEC seeks to “punish people without juries or independent judges and through procedures different from those used in our courts.”
He said that approach violates constitutional constraints that “ensure that even the most unpopular among us has a fair trial in an impartial court, with an independent judge and an equal jury to resolve the case.”
Defenders of the administrative state seem to believe that federal agencies are foolproof in targeting greedy bad actors who are trying to extort money from the unwary, undermine public safety, or threaten the environment.
But Gorsuch noted that “while violations of old rights may begin with lawsuits against unpopular people, they rarely end there.”
Jacob Sullum is a senior editor at Reason magazine. Twitter: @jacobsullum
