This past term the Supreme Court shook the world of administrative law when it issued its decisions in Loper Bright Enterprises v. Raimondo and SEC v. Jarkesy, two decisions which re-established that administrative agencies must consider due process rights before enacting any regulation or attempting to seize private assets. These decisions rein in the regulatory burden by restoring judicial review over administrative regulations and enabling defendants to have a trial before the state seizes their assets. 

In Loper, SCOTUS ended forty years of Chevron Deference -- the practice of courts deferring to agency decisions on the basis that experts should be trusted. Though due process demands that every party have the opportunity to be heard in court and have their cases decided based on relevant law, under Chevron, agencies could have claims thrown out procedurally. Consequently, administrative agencies won 77% of the time. Chevron allowed agencies to deny litigants their day in court without recourse. 

Critics of Loper argue that Chevron deference is a necessary evil because without it, experts within administrative agencies cannot wield their expertise to benefit the public without succumbing to political pressures or endless litigation. Loper’s critics ignore that the Court did not overturn all deference -- they only disregarded the high deference that Chevron granted. Loper’s decision reverts the deference standard to Skidmore v. Swift & Co. which uses the lower standard of granting “respect” to agency decisions. When courts use Skidmore’s lower threshold, agencies only win 56% of the time. 

Skidmore’s lower deferential standard allows courts to utilize judicial review to protect afflicted parties’ due process rights by weighing an affected parties’ due process interest against the government’s interest in technocratic independence from the political and legal processes. This occurred in the Fourth Circuit where Skidmore deference was used by the court to find that an agency’s interpretation of a statute preventing an illegal alien from having his asylum claim examined was unreasonable due to the existence of domestic abuse. Loper’s revival of Skidmore shows that the Supreme Court is prioritizing litigants’ due process rights; which should lead to agencies creating and enforcing less intrusive regulations of private rights and creating ones that prioritize the public interest.

By fining defendants without a trial, administrative agencies have disregarded the Seventh Amendment, which states: “In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved...” Instead, the defendants would attend an administrative hearing with an Administrative Law Judge (ALJ) (who is employed by the agency bringing the action) who would decide whether the defendant violated the agency regulation. If the ALJ found that the regulation was violated, then the agency would levy a civil penalty against the defendant. Without a requirement for a trial on penalties, agencies have been free to levy fines they deem fit for the violation. 

Consequently, agencies have been relying on civil penalties to fund themselves. Between 2010 and 2015, 34 federal agencies collected $83 billion in fines and penalties, and from 2012 to 2028 the federal government collected at least $10 billion in revenue from civil fines per year. Agency reliance on fines resulted in excessive fines being levied without a trial, such as when the SEC fined BMO $60 million last August for failing to adequately maintain records.

In Jarkesy, SCOTUS affirmed a defendant’s Seventh Amendment right to a trial by jury before a federal agency can take their property. Jarkesy’s critics claim that this decision will impede federal agencies’ ability to enforce federal law. This is incorrect due to the narrow scope of the ruling. The majority limited Jaresky’s scope to penalties levied based on violations that stem from common law; meaning if a fine arises from a violation that wasn’t historically handled by the judiciary then a jury trial isn’t required. If an agency requests a penalty and cannot convince a jury that the penalty requested is reasonable, then the penalty was unreasonable for the violation. Jarkesy will impact how other agencies enforce federal regulations as defendant’s are now less likely to face civil fines without a jury trial -- which should protect defendants from unreasonable fines.

The Loper and Jarkesy decisions rein in administrative agencies’ ability to squash due process. These decisions should protect parties by enabling them to have their day in court against the power of the federal government. Finally, agencies must find alternative ways to enforce federal law instead of relying on vague rules and excessive fines.

Ryan Silverstein is a J.D. Candidate at Villanova University and a fellow with Villanova’s McCullen Center for Law, Religion and Public Policy.

Image: Kjetil Ree via Wiki