Democratic-appointed Justice Sonia Sotomayor lamented the Supreme Court decision she accused of "dismantling" the administrative state Thursday, a possible sign of what's to come as rulings threaten to claw back more agency powers from the executive branch.
Sotomayor, who stands with only two other ideologically similar jurists on the Supreme Court's 6-3 Republican-appointed majority high court, dissented after the majority ruled that the 7th Amendment right to a jury trial bars the Securities and Exchange Commission from conducting their own prosecutions.
"Today’s decision is a massive sea change. Litigants seeking further dismantling of the 'administrative state' have reason to rejoice in their win today, but those of us who cherish the rule of law have nothing to celebrate," Sotomayor wrote in opposition to Chief Justice John Robert's majority opinion, which was joined by Justices Clarence Thomas, Samuel Alito, Neil Gorsuch, Brett Kavanaugh, and Amy Coney Barrett.
Several legal experts suggested Sotomayor's dismay over the outcome of Jarkesy v. SEC may signal what the high court is potentially about to decide in a major challenge to administrative powers in two cases that aim to overturn or sharply curtail the 1984 Chevron doctrine, which tells federal courts to defer to executive agencies' interpretation of statutes and regulations when legislation passed by Congress is otherwise vague or ambiguous. The Supreme Court is slated to decide more cases Friday and Monday.
"Sotomayor's dismay and honesty, she prefers the court's precedents downplaying the constitutional limits on the administrative state, suggest that other rulings yet to come this season will also recognize further limits," said Morgan Marietta, dean of economics, policy, and history at the University of Austin.
The Supreme Court will in the next few days decide Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce, which asks specifically whether the justices should "overrule Chevron v. Natural Resources Defense Council, or at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency."
"It is likely that the court will overrule or at least narrow Chevron," said Mike Davis, founder of the Article III Project and a former clerk to Gorsuch. During oral arguments, a majority on the court appeared poised to roll back the 1984 doctrine.
"This will drive lovers of the administrative state mad. They want unelected and unaccountable bureaucrats to continue to make decisions that are painful for Congress to make and difficult for judges to review," Davis added.
Legal experts say the upcoming decision over the Chevron doctrine could become a boon for businesses seeking to challenge regulations under the Biden administration.
"With regulators constrained, only Congress could allow more onerous regulation, yet we believe it will mostly refrain from doing so. The consequence: U.S. businesses are likely to avoid material regulation in many sectors," Matthew Schettenhelm, an analyst at Bloomberg, wrote in a new 24-page report on the possible effects of diminishing Chevron.
Meanwhile, the Jarkesy case focused on how the SEC enforces securities laws, including those that prohibit insider trading. The SEC has long used in-house administrative law judges to preside over securities fraud trials, though the agency can also sue in federal court.
People subject to in-house adjudication have complained that the process violates 7th Amendment rights and gives the SEC too much of an advantage by forming a home-court advantage.
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Carrie Severino, president of the conservative judicial advocacy group JCN and a former clerk to Thomas, said the majority "rightfully saw through the government's attempt to evade its protection" of hedge fund manager George Jarkesy, the plaintiff in the case.
"Today, the court reminds us that administrative agencies can't opt out of the Bill of Rights," Severino said. "A decision regarding Chevron deference will be issued soon that, however, it is decided, will shape whether agencies still have a two-ton thumb on the scale in litigation or whether they will have to play on an even field with the citizens they regulate."
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